Word, Excel, and Powerpoint will get a new file format all based on XML.
The extensions will change from .DOC, .XLS, .PPT to .DOCX, .XLSX, .PPTX.
The new file format is actually enclosed in a ZIP file. Change the extension name to .ZIP and you’ll be able to double-click and get access to all the pieces of the new format.
The new file format will be usable on existing versions of Office.
From Scoble
In my mind Office was always associated with format lock-in and a closed, proprietary approach.
But now I can see EVERYTHING inside the new files. Wow.
Changing the file formats is a big risk for Microsoft and indicates that Office 12 will be the most significant release of Office since 1997.